Member Info for The_Frog

If Arc land a deal with Anglo, it will be positive for two reasons: (1) further confirmation Arc is potentially onto something big and (2) Anglo's funds and technical expertise will help locate and prove up the mega deposit (fingers crossed).

An Anglo deal is just one more step towards the end game. The two comparables for the end game are : (1) Kiwara plc which discovered the Kalumbila / Sentinel deposit 40km from Arc and was acquired by First Quantum for $260m in 2009 at a relatively early stage and (2) Equinox which had started production at the Lumwana mine 100km from Arc when it was acquired by Barrick for C$7bn in 2011. The upside is potentially massive.

One key question is the structure of the deal with Anglo. I'm hopeful that Nick and Remy will be able to strike a good deal given the interest in the asset and the drill results to date.

Anyone else think it was odd that they put out the RNS we've been waiting for months for at 4pm? Why not wait til 7am tomorrow?

Agree that the holes reported today do not represent a discovery. If I understand the RNS correctly, these holes demonstrate Arc's licences are in the right geology - similar to Sentinel. The next step is for Arc to locate the large accumulations of copper mineralisation which would represent a commercial discovery. See in particular this para:

"Many deposits in the Copperbelt are located in the vicinity of macrostructural features that would have ultimately had a bearing on deposit formation. At both Fwiji and Muswema, copper bearing fluids are proven to be have been present. Identifying and targeting of the potential structural traps will be the next steps to locating potential large-scale metal accumulations."

I think this is where Anglo is vitally important. They will provide cash and technical / geological knowledge to find the large deposits. In fact Vassili blurted out as much on the investor call in July when he said he thought Anglo would carry out airborne geophysical work on Arc's licence area at Anglo's expense.

It's the solg crew arriving at arcm! Clearly a good sign. I'm a solg holder also but daren't comment on that board.

Hi Zoros. Would recommend some of the interviews here: http://www.arcminerals.com/news/media-and-press/default.aspx for getting up to speed, in particular the most recent investor call and the Crux interview.

Exactly, Arc are in the driving seat, but the details of the legal relationship between the shareholders will be important for any deal.

Just to be clear, from today's RNS Anglo are doing DD on the companies (Zaco and Zamsort) not the minority shareholder (Kopara). I would imagine a key part of the DD will be the shareholder agreement Arc have with Kopara for the two companies. As I understand it, to date Kopara have paid their share of drilling costs to maintain their share of Zaco and Zamsort. The question is: how will it work between Arc, Kopara and Anglo if Anglo want to invest into Zaco and Zamsort or even acquire Zaco and Zamsort? Does Kopara have to take any deal accepted by Arc? Can Arc / Anglo dilute Kopara if they don't want to match any investment? I imagine Arc is in a stronger position relative to Kopara because Arc is majority shareholder but exactly what this means will be governed by any shareholder agreement for Zaco and Zamsort.

For me the technical review is the important bit. The technical work determines the quality of the asset. The fact that Anglo want to continue after concluding the technical review is therefore a positive.

The diligence on the companies is housekeeping - make sure ownership is order, there are no claims against the company, etc. Clearly this is important, particularly in a jurisdiction like Zambia, but it does not define value in the way the technical review does.

Again, I find Arc's tactics interesting - they have given an update on a fairly technical stage in the Anglo process before any more drill / assay news. Again, it feels to me like they are holding fire on the drill / assay news until the negotiation with Anglo begins in earnest.

Arc also has the pressure point of the end of the Exclusivity Agreement in a month or so's time while other majors are sniffing around.

Arc's Zambian licences are held in 2 companies (Zaco and Zamsort). The fact that Anglo are doing DD on both means they are interested in all of Arc's Zambian licence area. This is not really a surprise, but it is still a positive I suppose. I don't think it tells us anything about potential deal structure.

I suppose what I am trying to say is if you believe in the asset and management focus on the long game, and if you don't you're probably in the wrong investment...

In previous years Arc have released great drill results, the share price has spiked and then it has been sold down again. This hasn't really got us anywhere as Arc has subsequently had to place in the market at a rubbish price plus warrants galore to raise funds for the next drill season.

Anglo's involvement changes that dynamic as we have a clearer path to crystallising the significant value that we think is there. I would much rather the company focus on the Anglo technical review while that is ongoing. Only when the technical review has come to a conclusion do they need to focus on the share price - whether for a deal with Anglo or someone else. We are in an exclusivity period for technical review right now so there is no point in pumping the share price when Arc cannot actually capitalise on it.

In answer to eimaj, no matter how good the assets are, the market cap is important as it is a clear reference point for value in any discussions.

I would also add if we can raise a decent amount of cash from CASA sale in the meantime that will be a big plus as Arc will be in a much stronger negotiating position with less need for cash from Anglo or anyone else.

Whereas if Arc are planning to sell a small equity stake to raise fund for a final drilling season before takeout, it would make sense for them to hold back news and release in one big bang to boost the share price shortly before the equity raise...

I was looking through Kiwara's RNSs and they raised $6m from a small equity raise to a strategic investor (IFC) in April 09 for more drilling prior to being taken out in November 09.

Obviously I wasn't suggesting allowing Anglo to take a controlling stake. Both JV and plc equity stake can work, as demonstrated by GGP and SOLG - both were referenced by Remy on the investor call incidentally. What matters is the underlying asset. We just need to be patient while Arc prove this up.

Agreed, the expectation management is poor.

Stepping back, I am not surprised by the lack of newsflow. Arc and Anglo are deep in technical review / due diligence. As Remy said on the investor call - ignore the short-term ups and downs of the share price and focus on the fundamental value. My guess is that Arc and Anglo will remain focused on the technical review until the end of the current EA in January as assay results will be coming in til then. Then Arc and Anglo will have a window to negotiate some sort of transaction before the next drilling season in June 2021.

My guess is that Arc will not be completely bought out at this stage. Arc will want to drill a few more of these tier 1 targets to increase value before we are sold. That would suit Anglo also as it gives the more certainty on the resource.

I think the commercial transaction will be funding for a bigger drilling campaign next year - either via equity at Arc plc level or a JV at Zamsort / Zaco level. The sale of non-core assets and appointment of an experienced Zambian board member has made this much more straightforward. I would prefer Anglo to take an equity stake in Arc a la Solgold. A JV would reduce competitive tension in my view as we would be more closely tied to Anglo. There is also the complication of the minority interests in Zamsort / Zaco - do they match any further investment in drilling by Arc / Anglo or are they diluted?

This is complete guess work. If he did have information on a deal or drill results he would be an insider and should not be selling.

The fundamentals have not changed.

I agree that the lack of information is holding this back.

I suppose all we can conclude is that the resignation is either a fall out over strategy, or it is necessary to facilitate a deal. The lack of comment in the RNS would support either of those theories. The fact that they have recently appointed another Zambian director supports the latter theory that this was a planned move, although this may just be coincidence.

Mushinge appears to still be a director of Zamsort Limited. He certainly was when he became a director of Arc in Feb 2019 (see appointment RNS) even though he had no direct shareholding (Arc and Kopara were only shareholders at that point). He also still lists Zamsort directorship on his Linkedin. I am unclear as to whether or not he has an interest in Kopara.

Could an explanation of his resignation be that he would be conflicted in any negotiation as both a director of Arc and Zamsort, particularly if he had an interest in Kopara? By resigning from Arc he is able to have a seat at the negotiating table.

Pure speculation but I am struggling to work out why someone would resign as director from a company which must represent a significant proportion of his personal wealth.

Anyone know who owns Kopara Investment Limited or who its directors are? Website says it is family owned, based out of the Middle East and BVI registered, but I cannot find any other information.

http://www.koparainv.com/

Intrigued that the high grade sulphides are from 163m with the exceptional 7.17% Cu from 165.5m. I cannot see any mention of how deep the hole was drilled to, nor can I see any comment that mineralisation is still open at depth. Is this just scratching the surface of a deeper body? Or is this a short but very high grade intercept, hopefully indicative of more elsewhere? Anyone have a view this?

My theory for the weak share price in recent days is that some of the former Tethyan shareholders who received Adriatic shares are now selling. These Adriatic shares were admitted to the LSE on 8th October. It's just a matter of waiting for the selling to dry up.

The fundamentals are unchanged - world class project at Rupice, route to production in the short-term with minimal equity dilution, huge exploration potential in Serbia and new Bosnian acreage.

There are also some decent catalysts over the next few months - drilling in Serbia, mining permits, DFS, financing.